Please answer number 3,

Company X has been paying a dividend of $4 for a long time. The company pays all its earnings as dividends, and it is expected to have constant earnings for each future period. There are 100,000 shares outstanding, which means that in each period the total amount of earnings is 400,000. The appropriate rate of discount is 5%. 1. Suppose that you are at time zero, and the current dividend has just been paid. Compute the price po of a share. a 2. Suppose that at period zero the company decides to cut its dividend to zero for period 1 only. The money which was to be distributed as dividend in period 1 will instead be used to repurchase shares. After that, dividends will be distributed as before. 3. What will be the price p at which the shares will be purchased at time 1? (Beware: it is not $80) Company X has been paying a dividend of $4 for a long time. The company pays all its earnings as dividends, and it is expected to have constant earnings for each future period. There are 100,000 shares outstanding, which means that in each period the total amount of earnings is 400,000. The appropriate rate of discount is 5%. 1. Suppose that you are at time zero, and the current dividend has just been paid. Compute the price po of a share. a 2. Suppose that at period zero the company decides to cut its dividend to zero for period 1 only. The money which was to be distributed as dividend in period 1 will instead be used to repurchase shares. After that, dividends will be distributed as before. 3. What will be the price p at which the shares will be purchased at time 1? (Beware: it is not $80)